Big Beer in the U.S.A.

Let’s talk about beer. No, not craft beer, but good, old-fashioned mainstream American beer. You know — the bread and butter of your bar’s business. Yes, it’s hard to ignore the 800-pound gorilla, and if you’re like every other operator in the country, you’re probably crazy for crafts these days. It’s hard not to be. Just say the word “beer,” and people instantly start talking about crafts with enthusiasm. Craft beers may be chic and trendy, but everyone needs mainstream domestic beers in their program. From local pubs to upscale bistros, virtually every operator in this industry relies heavily on the top domestic names of Bud, Miller and Coors. Even bars that snub macros can’t deny the profitability of no-frills, major-brand domestic beers. They may not be all the rage, but they’re dependable and can play a very profitable role in your beverage program if you tap into what they have to offer.

No Mojo for Big Beers

Of course, this begs the question: If they’re cheap, tasty and profitable, why aren’t mainstream beers doing better? Everybody’s still penny-pinching, so inexpensive domestic beers should be a no-brainer choice. However, the stagnant economy is affecting the core buying group — men ages 21 to 34 — the most. According to statistics from the Beer Institute, domestic growth stumbled somewhat in 2010, down 1.6%, while the entire beer industry was down 0.8%. This makes the second consecutive down year for the category and only one of nine down years since 1980.

It’s not just the economy. Suzanne Strachan, a server at Newcastle Publick House in Newcastle, Maine, comments on the shift in popularity from macros to crafts: “As with any mass-produced product, there is the loss of originality or unique qualities. It became the in thing to choose a beer that was brewed with ‘flavor and integrity.’”

Strachan sees crafts in vogue; however, when asked to specify her beer of choice, she says, “Miller High Life is my preference above all other domestic brands. Its drinkability is easy and consistent. I always know what I’m getting.”

And while the “local” angle of crafts is appealing in the current climate, there’s no arguing with the American-made heritage of the big league U.S. brews. Strachan points out that the sale of Anheuser-Busch to a Belgian company is a difficult hurdle for some Americans to get over, but no one can argue that Budweiser remains a staunchly American product.

Domestics Dominate

Even with the economy and craft competition, domestics still encompass the largest segment — in volume and sales — of the U.S. alcohol industry by a long shot. Although an overwhelming majority of U.S. breweries — 97.2% — are craft brewers, this segment of the beer industry owns only a small market share: 7% of sales and 5% of volume, according to the Brewers Association.

“What I’ve learned is that even though everyone’s talking about crafts, I still sell more domestics — Bud Light and Miller Lite draft — than any other tap, and it’s by far,” says Chris Lewellen, co-owner of The Well Bar Grill & Rooftop and Lew’s Grill & Bar in Kansas City, Mo. “I want to make sure drinkers still feel welcome and showcase those beers correctly because they are my bread and butter.”

Even bars with a strong craft focus attest to the importance of macros. Irvine, Calif.-based Yard House chain has an expansive selection of crafts, yet Director of Beverage Kip Snider says, “There’s always a place for macros in our establishment; they’re routinely in the top 10 or top five.”

The Well Bar Grill & Rooftop in Kansas City, Mo., showcases lighter session beers so patrons can have a few more during a night out.

Loyal Fans

Don’t underestimate the value of brand loyalty.

“Macro beer drinkers are loyal,” Lewellen says. “A Bud Light guy is a Bud Light guy for life, but someone who’s learning about crafts will try everything. I don’t find that there’s a lot of loyalty in craft beer. Customers want to have a couple, say they tried it and move on.”

If Miller Lite is the beer your customers are most loyal to, then why not treat them to specials on it? It’s inexpensive to begin with, but an occasional discount is highly appreciated by regular clientele.

Chris McDonald, general manager of Timothy O’Toole’s Pub in Chicago, also cites brand loyalty, particularly with regard to trading down: “I believe most consumers are pretty brand loyal. For some it’s a taste thing, for others it’s a hangover thing. The Guinness drinker isn’t going to start drinking Bud Light because it costs less. Most likely, he’ll just drink less Guinness.”

The Original Session Beers

There’s been a lot of buzz lately about so-called “session” beers: lighter style, tasty brews that are low in alcohol so you can have a few. The term refers mainly to crafts but really, that’s the definition of most mainstream beers.

“Obviously, domestics are session beers,” Lewellen says. “A softball team drinking Bud Lights will drink 30% more than if they’d been drinking a craft beer, especially in summer. The tab’s going to be higher vs. a couple of crafts, which will fill them up more.”

Besides their low alcohol content, macros are much easier on the wallet. Lewellen adds that he and his business partner/brother typically choose Select 55 or Michelob Ultra to enjoy with customers or friends so they can have a drink and still function for the duration of the evening.

Lovin’ Low Cal

It’s a calorie-conscious world out there. Low-calorie and super-low-calorie beers remain extremely popular. Although top sellers seem to vary by region, light beers dominate.

Tina Santoro-Smith, marketing director for Michael’s Harborside in Newburyport, Mass., says, “Bud Light is our number one domestic beer. We would attribute that simply to the fact that it is one of the top-selling beers in the country and has a huge media presence.”

“Miller Lite Draft is the number one seller in our account, bar none,” McDonald says. “Super low-cal beers, like MGD 64, are pretty popular with our clientele. We carried the MGD 64 Lemonade in bottles this summer for $3, making it the second-lowest-priced bottle we carried next to PBR Tall Boys.”

Old-School Cool

Who would have thought that old time beers would become the bar staple they are today? PBR has been on a roll for the last few years, partly due to price and partly due to trend, but Schlitz is going through its own revival. If anything, it’s on the upswing while PBR is slowing down somewhat. And there’s no denying the cachet of the can. Put it in a Tallboy or Pounder, and it practically sells itself. Another old-timer in a can, Narragansett Beer from Rhode Island, has been revived and does very well, particularly in New England. However, in Chicago, McDonald finds that “PBR and throwback Tall Boy cans, such as Schlitz and Hamms, are definitely taking a back seat to craft beers.”

Although the Yard House chain has a large selection of craft beers, macros perform in the top five or 10 consistently.

Pretty Packaging

In many ways, what’s on the outside of the bottle is almost as important as what’s on the inside. Cold chill cans and aluminum bottles, such as the Coors Light Two-Stage Activation bottles and the Budweiser aluminum bottles, continue to perform well. Half of the appeal is the “cool factor,” and the other half is the actual chill factor.

“Customers still want their beers cold,” Lewellen remarks. “We have a chill chamber, and chill it down to 22˚F — customers love it. Ultra sells so well in summertime that we put it on tap.”

“A new and fun idea is Bud Light’s scratch-off label you can write on,” McDonald comments. “Customers who drink domestics really love anything with instant gratification, such as Miller Lite’s Pull-Tab bottles that debuted a few years ago.”

Santoro-Smith notes that there’s a buzz about the new Bud Light bottles at Michael’s Harborside, as well.

Gateway Brews

Several of the larger brewers are launching craft-style extensions, which are a great way to cater to a more mainstream consumer interested in sampling craft beers but not ready to make the leap to beer-geek status. Leading the pack is Blue Moon, a brand that walks the line between mainstream and craft style. Many operators, including those from Michael’s Harborside and The Well, mention Blue Moon as a top seller.

At Yard House chain, “Blue Moon is our number one beer company-wide,” Snider says.

Given Yard House’s craft focus — the average Yard House boasts 130 taps, 65% of which are devoted to crafts — that’s saying something.

Meanwhile, McDonald comments, “We carry a few of the craft extensions from the big domestics. Blue Moon draft being our best ‘craft’ seller — it’s always in the top five — is another comfortable choice and a home run by the people from MillerCoors. In addition, we carry the Blue Moon seasonal draft. With names such as Honey Moon, Full Moon, etc., customers identify with the ‘Blue Moon’ name and are willing to try a different variation of a very popular beer.”

Soon, the domestic beer industry will right itself, and drinkers will come back to the fold. Strachan at Publick House sums it up best: “Maybe it’s more about consistent, easy drinkability. Not to mention price. People like their routines, and most people I know are on a budget of some sort. At some point, it’s all going to come back around the same way that PBR and Schlitz have.” NCB